| 921160 | |
| A. Humenuk |
April 24, 1992
May 5, 1992
1992 TEI CANADIAN CONFERENCEDRAFT RESPONSE
9. A company is moving its offices across town. Some employees move their personal residences to a place that is substantially closer to the new location than their old residence. (for this question, "substantially closer" means at least 30 minutes in time, but not 40 km in distance). The company reimburses the employees' moving expenses. We understand that the employee would not be eligible for a section 62 deduction. Would the company reimbursement constitute a taxable benefit?
RESPONSE
In general the employee should meet the tests in section 62 of the Income Tax Act in order to pay him a non taxable reimbursement for relocation expenses. This means a move of more than 40 kilometres. We have however provided favourable opinions in some situations where the employee would not qualify under section 62; a move out of the country is an example. While there is a presumption that there will be a taxable benefit where an employee is reimbursed for moving expenses for a change in residences within the same general metropolitan area we would want to look at the facts of a particular situation.
Items we would look at would include:
- eligibility for reimbursement i.e. whether available to all employees or limited to certain levels
- collective agreements i.e. whether the employer is required to cover the employees' costs
- the metropolitan area involved i.e. Toronto, Montreal or Vancouver may be treated differently than smaller centres